NAB to reopen forex trading desk

MELBOURNE - National Australia Bank, Australia's largest bank by assets, said yesterday that it would restart next month a foreign exchange options trading desk shut for more than a year because of a currency trading scandal.

The trading scandal cost the bank A$252 million ($270 million), forced top-level resignations and led to charges laid against four sacked traders.

National said the Australian Prudential Regulation Authority (Apra) had given its approval for the desk to be reopened on May 9 after the bank met conditions imposed by Apra. The desk was closed in January 2004.

JP Morgan analyst Brian Johnson said earnings from the desk were small but that it was an important part of the product range the bank offered customers.

"The danger is when you can't offer your customers all of the product set, and they have to go to another party to get it, they may as well take all of their business elsewhere," he said.

"It will take an extended period of time to actually get all their relationships back to where they were, given that people that needed to deal in the interim period will have had to establish relationships with other banks."

The banking regulator ordered National last year to tighten its risk controls and criticised a "profit is king" culture that it said had allowed the scandal to happen.

National chief executive John Stewart said yesterday that the bank had submitted to Apra 72 of 81 remedial actions the regulator required. Of those, 30 items had been closed out, he said.

"We have reached a milestone in the remedial actions programme and will continue to work closely with APRA to complete the programme," Stewart said in a statement.

Apra's report last year came after the resignation of the bank's chief executive and chairman, the sacking of the traders and three top executives and a critical report by accountants PricewaterhouseCoopers.

The former head of NAB's foreign currency options desk pleaded guilty last month to charges that he dishonestly used his position to gain advantages for himself and others. Three other former currency traders have also been charged.

The irregular trading over which charges have been laid took place between October 2003 and January 2004.

National shares last traded down 39Ac at A$28.36, broadly in line with a weak market.

- REUTERS